People have made careers writing about investing like Warren Buffett. Strategic investments at unexpected times, the Oracle of Omaha has a knack for not only reading the market but shifting its tides. Placing bets on ailing financials when just about everyone is backing away and keeping it simple with long-term holdings in reliable blue chips like Coca-Cola (KO), Buffett seems to nail the breakdown again and again.
In term of imitating it may be the way he protects his portfolio rather than a specific investment in an entity like Bank of America (BAC). After all it’s unlikely a typical investor will be seeing the massive returns Buffett is able to produce on his $5 billion investment. That said, perhaps the best angle to invest like Warren Buffett is to invest in Warren Buffett.
Berkshire Hathaway (BRK.A), Buffett’s investment vehicle is up 9 percent for the year. This is an impressive feat considering the enormous swings in volatility. That said, it’s also nearly on sale as many doubt the octogenarian’s ability to take the crumbling North Carolina-based Bank of America back to profitability.
The company is currently trading toward its 52-week low though it is up in the 30-day period. The exit from BRK.A for the year may be the combination of the departure of David Sokol, long thought to be the prime candidate for Buffett’s replacement and a general exit from equities. The volatility has led many fund managers to pull a huge quantity of their client’s cash from the market in the past months in an attempt to protect them in the event of continued bad news.
This has left the market at attractive levels, especially as the summer winds down and more investors will be looking to re-enter after sell-offs earlier in the season. Investing in Berkshire, which has gathered up a basket of rejected stocks as others have abandoned them, could be a portfolio boost. The fund has holdings in a wide range of businesses, which will help assuage losses in some sectors that remain in danger. Financials for instance, whether they continue to sink on the potential losses incurred by a lawsuit with the U.S. government will be supported by blue-chips and holdings in foreign food companies that will continue to expand with the emerging market.
Nothing is a sure bet, but the fact that in the 44 years the fund has only had two years of losses, is telling of its success rate. 2001 and 2008 were the occasions when the fund ended in negative territory, both recession years. This, compared with 11 years during that time when the market itself ended in the red. Granted, 2011, with a barrage of negative economic news and weak job growth, could make it the third, but so far, the ratio looks attractive and BRK.A remains well above water in a tough year for equities.
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